We all enjoy reading, from time to time, Wolfgang Munchau’s pieces, which are a variation on his regular criticism of and frustration with German Chancellor Angela Merkel with regard to the euro area crisis.
But he overlooks both the dangers of the game of chicken he suggests and the achievements of my government, which was called to act in an emergency situation
In November 2011, Italy was close to being shut out from the financial markets. Reducing the financing needs in this case was an imperative, and this could only be done by raising taxes, which to a large extent had been decided but not implemented by the previous government. There was no additional fiscal correction in 2012 despite the worsening of the international context and the earthquake that struck the Emilia Romagna region. Instead the adjustment was progressively rebalanced, relying increasingly on a spending review and cuts.
What this government has done to bring down prices and create more jobs in the services sector is without precedent for such a short period of time and given the lack of a genuine majority in parliament. Italy’s markets are now as open as the EU average, in some cases more, according to the OECD. It estimates the reforms will have lifted Italy’s economic growth potential by at least 4 percentage points of GDP by 2020. But the job is not over and could easily be undone. This is why I have entered the political arena; to garner the support of the vibrant forces of society – and there are many! – that want the country to grow through change, merit and respect of the law.
With public accounts now healthier and amongst the most sustainable in the world, as noted by the IMF, Italy can now allow itself some leeway to sustain activity and employment and to be more equitable.
On the need for all countries, including Germany, to contribute to the rebalancing effort, allow me to remind readers that ever since taking office I have been the first to push the European Council for an agenda of measures to sustain demand. My government also led the fight for the stabilization of financial markets. Without fiscal consolidation and reforms in a crucial country like Italy, and without our leadership and determination leading to the June Summit, it is doubtful the ECB would have felt comfortable in saying and doing what it did afterwards, which was indeed crucial.
We certainly need to be more ambitious and daring not only in preserving but mostly in strengthening the European integration achieved so far, starting with our Economic and Monetary Union, and this is what I’ve been fighting for all along.
Prime Minister of Italy